All businesses, both big and small are well aware of the need for credit. Credit card companies know this and are not about to leave any market untapped. Therefore they have created credit cards that serve these needs directly. While a business credit card is one thing there is also a need for corporate credit cards as well. These cards are designed for the corporation rather than the individuals within it.
When a corporation applies for credit the features and terms of the credit agreement is made between the officers of the corporation and those that issue the credit cards. Usually many cards will be distributed under this one account so that specific people within the corporation can use the cards for expenses on behalf of the company. The same idea applies to corporate credit cards as business credit cards in terms of the financial reporting systems that are used but they are more complicated and complex.
The biggest difference between the two types of cards, business versus corporate is the method of payment. With small businesses the debt and payments fall on the primary individual applicant but with corporate credit, they are issued in the corporations name and responsibility falls on the officers of the corporation. Corporate credit cards are just more complex than that of small business cards. While small business owners can select a company and apply for credit, corporations simply can not enjoy this luxury.
It is mandatory that corporations have corporate credit cards because this is how certain payments are made such as paying vendors and suppliers, paying for corporate travel expenses and other expenses, paying for office supplies and other corporate needs. These cards are also a good way to keep track of items on an individual basis as well as their costs.
One advantage of a company such as American Express is that they not only track expenses but will often monitor such things as travel expenses and make adjustments and suggestions on ways that your corporation can save money in the future. Many have saved quite a bit of money doing this. Statements make great ways to record expenditures and follow up on them if there is a discrepancy during an audit. Your accountant will love you for it!
The only problem that can arise is if cards are distributed into the wrong hands and expenditures are made that are not approved and are non business related. There should always be a firm policy in place about using corporate credit cards and action should be taken against those who do not adhere to the rules. They should not be dispersed randomly but with great discretion.
Corporate credit cards are no doubt very useful and allow a corporation to function without the need for using cash. These cards are usually offered by banks, credit card companies themselves, and credit unions. Make sure that you look over all of the terms as they can vary greatly. Corporate credit cards are an asset for any business.
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